How do gas companies make higher profits from high oil prices?
Monday, February 14th, 2011
dmowen03 asked:
I know this sounds like a naive question, but it seems like if supply is set by OPEC, gas companies would be paying those countries higher prices for the raw crude, so they wouldn’t come out that much better. Do they make higher profits because they get a proportional mark up on a higher base price? Or is it because the gas companies have reserves that they have purchased previously at a lower price, but are now worth more? Can someone explain the economics of the oil industry to me?
Vertical Vinyl Siding
I know this sounds like a naive question, but it seems like if supply is set by OPEC, gas companies would be paying those countries higher prices for the raw crude, so they wouldn’t come out that much better. Do they make higher profits because they get a proportional mark up on a higher base price? Or is it because the gas companies have reserves that they have purchased previously at a lower price, but are now worth more? Can someone explain the economics of the oil industry to me?
Vertical Vinyl Siding
